Suppose that the productivity per worker in the crude oil and natural gas industries of Westland and Eastland are as follows: $$\begin{array} { l c c c }
& \underline{ { \text { Output in Thousands of Kilograms } }} \
& \text { Crude oil } & \text { Natural gas } \
\text { West land } & 4 & \text { or } & 3 \
\text { East land } & 2 & \text { or } & 1
\end{array}$$ a) Which country has the absolute advantage in producing crude oil?
b) Which country has the absolute advantage in producing natural gas?
c) Which country has the comparative advantage in producing crude oil?
d) Which country has the comparative advantage in producing natural gas?
e) According to the theory of comparative advantage, will there be trade? If yes, what is the direction of trade?

Question

Suppose that the productivity per worker in the crude oil and natural gas industries of Westland and Eastland are as follows: $$\begin{array} { l c c c } 
& \underline{  { \text { Output in Thousands of Kilograms } }} \
 & \text { Crude oil } & \text { Natural gas } \
\text { West land } & 4 & \text { or } & 3 \
\text { East land } & 2 & \text { or } & 1
\end{array}$$ a) Which country has the absolute advantage in producing crude oil?
b) Which country has the absolute advantage in producing natural gas?
c) Which country has the comparative advantage in producing crude oil?
d) Which country has the comparative advantage in producing natural gas?
e) According to the theory of comparative advantage, will there be trade? If yes, what is the direction of trade?

Quizplus · Accepted Answer

The Answer of Suppose that the productivity per worker in the crude oil and natural gas industries of Westland and Eastland are as follows: $$\begin{array} { l c c c } 
& \underline{  { \text { Output in Thousands of Kilograms } }} \
 & \text { Crude oil } & \text { Natural gas } \
\text { West land } & 4 & \text { or } & 3 \
\text { East land } & 2 & \text { or } & 1
\end{array}$$ a) Which country has the absolute advantage in producing crude oil?
b) Which country has the absolute advantage in producing natural gas?
c) Which country has the comparative advantage in producing crude oil?
d) Which country has the comparative advantage in producing natural gas?
e) According to the theory of comparative advantage, will there be trade? If yes, what is the direction of trade?

Suppose That the Productivity Per Worker in the Crude Oil